What Next For Avaya?

Avaya’s filing for Chapter 11 has come with little surprise. And because of it, speculation about its break-up and future is rife.

Exactly 8 years and 5 days earlier Nortel Networks did the very same thing. And although that may be where the comparisons end, a great brand, great people, and even great products doesn’t remove the nightmare that is Chapter 11.

It might also be the ghost of Nortel Networks that finally does for Avaya too. Owners Silver Lake and TPG Capital paid close to $1Bn for some significant scraps from the Nortel break-up, further increasing their debt after the 2007 acquisition of Avaya for $8Bn. The current debt load 10 years on is just north of $6Bn.

There’s going to be no fire sale either. Avaya’s CEO Kevin Kennedy has stated that they’re keeping their contact centre jewel as part of their core business, leaving a more modest number of assets available for trimming.

Another big challenge is whether Avaya has the ability to adapt from traditional hardware vendor to a modern software and services outfit. On-premise and hardware sales have been drifting south for some time now, as more and more businesses have shifted to cloud and hosted alternatives. It’s this disruptive space where the current future of communications and collaboration lies, and it is an already crowded space with some serious players staking out their claims.

Like most modern corporations, Avaya is a Frankenstein company, made up of many parts acquired over the years from other organisations over the years. It remains to be seen whether the sum of the future parts will become greater than the whole.

One thing’s for sure, Avaya is going to be in the news for some time to come.